The Economics of Fashion
It’s
that time of the year again… large luxury brands are increasing prices by
around 5-10%+ across the globe. That’s bad
news for any girl looking to purchase a new bag. Chanel in particular is rumored to execute even
more drastic changes. Changes that may
be welcomed or shunned depending on where you live. The brand will:
1. Sync global prices to
reduce the large price gap between Europe, Asia, and the Americas
a.
Increase
prices in Europe, Decrease prices in Asia
2. Decrease Classic Bag
production, including the Boy Bag
Chanel Harmonizing Global
Prices:
In
the past, many, myself included, flocked to Europe for handbag purchasing
splurges. Those who mastered the art of
shopping all know, time and location is of the essence if you’re trying to get
the best bargains.
Retail
prices are significantly lower in Europe compared to Asia and the US across all
brands. In addition to the decreased
MSRP (the best perk of shopping in Europe), the VAT refund, amounting to about
5-7% provides even more incentive for foreign visitors. Throw in the weakening Euro, and European luxury products are 20-70% more expensive in
Asia/US (more so in Asia).
Starting
April 8th 2015, Chanel plans to achieve consistent brand positioning
worldwide by aligning prices for the Classic Flap, 2.55, and Boy Bag across the
globe. Bruno Pavlovsky, President of
fashion at Chanel plans to focus on “customers who are seduced by the brand,
who are seduced by our creativity, by our know-how and our finishing, and not
just the price differential.”
Prices
will increase by about 20% in Europe and decrease in Asia ie. China, Vietnam,
Thailand…Looking at the classic bag for example…you’ll see over a 20% increase
in Europe and a large decrease in China
2.55 Classic Flap
PAST
|
CURRENT
|
%VARIANCE
|
|
EUROPE
|
€ 3,500
|
€ 4,260
|
22%
|
ASIA
|
¥ 38,200
|
¥ 30,000
|
-21%
|
PAST
|
CURRENT
|
%VARIANCE
|
|
EUROPE
|
€ 3,100
|
€ 3,720
|
20%
|
ASIA
|
¥ 32,700
|
¥ 26,000
|
-20%
|
The Results?
Chanel
Classic Flaps are sold out in Europe in the last few months, and currently, Chinese
are lining up to make their luxury purchases like it’s Black Friday in Asia.
From
the retailers standpoint, normalization of pricing will decrease variances in both inventory and sales between various countries as people begin shopping more in
their home countries.
From a consumers standpoint, I say, NOW is the time to book that flight to Europe, SHOP, and stock up, because Chanel’s bold move will place pressure on other luxury brands to conform, and you want to get the best deals when you still can.
From a consumers standpoint, I say, NOW is the time to book that flight to Europe, SHOP, and stock up, because Chanel’s bold move will place pressure on other luxury brands to conform, and you want to get the best deals when you still can.
What
are take's on Chanel's bold move?
photos from ukfashionmag.com, chanel.com
photos from ukfashionmag.com, chanel.com
Post a Comment